ASSIGNMENT

OF

BUSINESS POLICY AND STRATEGY

ON

A).Michael E. Porter’s generic competitive strategies;

B).BCG Matrix.

PREPARED TO:

Prof. Shivani Aggarwal

PREPARED BY:

1. Manmohan Prasad Rauniyar

2. Kundan Kumar

3. Pappu Gupta

4. Hitesh Mahato

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 a). Michael E. Porter’s generic competitive strategies
A firm's relative position within its industry determines whether a firm's
profitability is above or below the industry average. The fundamental basis of above
average profitability in the long run is sustainable competitive advantage. There are two
basic types of competitive advantage a firm can possess: low cost or differentiation. The two
basic types of competitive advantage combined with the scope of activities for which a firm
seeks to achieve them, lead to three generic strategies for achieving above average
performance in an industry: cost leadership, differentiation, and focus. The focus strategy
has two variants, cost focus and differentiation focus.

Porter suggested four "generic" business strategies that could be adopted in order to gain
competitive advantage. The strategies relate to the extent to which the scope of a business'
activities are narrow versus broad and the extent to which a business seeks to differentiate
its products.

The key strategic challenge for most businesses is to find a way of achieving a sustainable
competitive advantage over the other competing products and firms in a market.

A competitive advantage is an advantage over competitors gained by offering consumers

greater value, either by means of lower prices or by providing greater benefits and service
that justifies higher prices.

The four strategies are summarised in the figure below:-

COMPETITIVE ADVANTAGE

Lower Cost Differentiation

Broad 1. COST 2. DIFFERENTIATION

LEADERSHIP
Target

COMPETITIVE

SCOPE 3(a). COST FOCUS 3(b).

DIFFERENTIATION
Narrow FOCUS

Target

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1. COST LEADERSHIP STRATEGY

With this strategy, the objective is to become the lowest-cost producer in the
industry.The traditional method to achieve this objective is to produce on a large scale
which enables the business to exploit economies of scale.

Why is cost leadership potentially so important? Many (perhaps all) market segments in
the industry are supplied with the emphasis placed on minimising costs. If the achieved
selling price can at least equal (or near) the average for the market, then the lowest-cost
producer will (in theory) enjoy the best profits.This strategy is usually associated with
large-scale businesses offering "standard" products with relatively little differentiation that
are readily acceptable to the majority of customers. Occasionally, a low-cost leader will also
discount its product to maximise sales, particularly if it has a significant cost advantage
over the competition and, in doing so, it can further increase its market share.A strategy of
cost leadership requires close cooperation between all the functional areas of a business.
Cost leadership strategy can be effective under the following conditions:-

 Price competition among rivals is especially powerful;

 Product of rivals are identical;
 Few ways to achieve product differentiation;
 Low switching costs;
 Most customers use the product in the same ways;
 Newcomers use low prices to attract buyers.

TAKING 3 EXAMPLES OF COMPANY WITH PRODUCTS

A. Samsung Mobile

 Samsung is one of the largest mobile manufactures in the world. Its markets are
around the world. Its mobile products are selling at the lowest price compared to
rivals. Samsung mobile uses cost leadership strategy to a large range of customers.

For Example: Samsung galaxy j 7, Samsung Galaxy A 8+,Samsung on J pro.

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B. Maruti Suzuki Car

 In Auto Industry, Maruti Suzuki car are used cost leadership strategy. It is the
lowest price comparision to Toyota brand name of car in small size are consuming
increasingly these years in India country.

For Example: Maruti Alto 800, Maruti Omni, Maruti Celerio.

C. LG Air Conditioner

 In air- conditioner industry, LG uses cost leadership strategy(best value strategy)

for its development.
For example, with product line of 1.5 hp, LG S12ENA offers a price higher than
Reetech RT12-CH/RC12-CH but LG offers more features and benefits than its rivals.
LG provides 3-layer filter and ability of automatic cleaning while its rivals offer 1-
layer filter only.

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 2. DIFFERENTIATION STRATEGY

With differentiation leadership, the business targets much larger markets

and aims to achieve competitive advantage through differentiation across the whole
of an industry.

This strategy involves selecting one or more criteria used by buyers in a

market - and then positioning the business uniquely to meet those criteria. This
strategy is usually associated with charging a premium price for the product - often
to reflect the higher production costs and extra value-added features provided for
the consumer.

Differentiation is about charging a premium price that more than covers the
additional production costs, and about giving customers clear reasons to prefer the
product over other, less differentiated products.

There are several ways in which this can be achieved, though it is not easy
and it requires substantial and sustained marketing investment. The methods
include:

 Superior product quality (features, benefits, durability, reliability);

 Branding (strong customer recognition & desire; brand loyalty);
 Industry-wide distribution across all major channels (i.e. the product or
brand is an essential item to be stocked by retailers);
 Consistent promotional support – often dominated by advertising,
sponsorship etc.

TAKING 3 EXAMPLES OF COMPANY WITH PRODUCTS

A. Samsung Mobile

 Samsung is directly competing Apple in the smart phone industry. In order to

attract more customers and gain market shares, Samsung use the differentiation
strategy in its innovated products development.
For example:- Galaxy Note 3, S- Pen was designed and attached to the
Galaxy. It is a stylus but more convenient and smarter. Moreover, wider screen of
Galaxy Note 3, higher pixel camera and longer battery make a big differentiation
compared to other rival's products.

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 B. Maruti Suzuki Car

 In order to gain customer's loyalty and increase revenue and market shares, Maruti
Suzuki car have its service more than others. Maruti Suzuki uses differentiation
strategy in doing business. It uses its own platform for its products lines. The
platforms are coded by Maruti Suzuki themselves. They are considered durability
and they are not decreased value much when customers want to buy their products.
They uses the differentiation strategy. They differentiate itself via providing good
products and keeping the value of products to secure customers.
For Example:- Maruti Swift, Maruti Zen Estillo , Maruti SX4.

C. LG Air Conditional

 LG company pursues the differentiation strategy. It focuses on providing excellent

package sevices of electronic technology for its customers. The LG Air conditional
are also providing of two years warranty comparision to Samsung. So it also plays on
differentiation strategy. Some products name of LG Air conditional that belongs to
differentiation strategy are:
For Example:- LG 1.5 Ton 3 star dual split AC, LG 1.5 Ton 3 star inverter
split AC, LG JS- Q12YUXA.

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 3(a). COST FOCUS

It aims at securing competitive advantage by selling products at

lower prices than those of its competitors. It concentrate on selling products at a low
cost to a narrow target segment . The main objective is to serve niche buyers better
than the rivals. The features of the products offered are tailored according to the
need and taste of the niche buyers.

TAKING 3 EXAMPLES OF COMPANY WITH PRODUCTS

A. Samsung Mobile

 Samsung mobile are focuses on a narrow market and gets huge profit margins at the
high income and upscale segment. Some products are also best value focus strategy
is used. On the market selling price is charged higher than other company.
For Example:- Samsung SGH-I917, Samsung Cetus with the basic
features but offer more advantage technology and design for customers.

B. Maruti Suzuki Car

 Maruti also tried to offer a low price product to a small and specialized group of
buyers. This helped MUL to cut down prices just hours before TATA introduced
India.
For Example:- Maruti Wagon R, Maruti Alto 800, Maruti Omni.

C. LG Air Conditioner

 In also LG Air Conditioner company, They are also focusing to the customers with
the low cost as durable, flexibilities and luxuary. It also made on advance technology
with design for the customers.
For Example:- LG UX 4.0, LG Window, LG Split.

3(b). DIFFERENTIATION FOCUS

In the differentiation focus strategy, a business aims to differentiate within

just one or a small number of target market segments.

The special customer needs of the segment mean that there are opportunities to
provide products that are clearly different from competitors who may be targeting a broader
group of customers.

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The important issue for any business adopting this strategy is to ensure that customers
really do have different needs and wants - in other words that there is a valid basis for
differentiation - and that existing competitor products are not meeting those needs and
wants.

Differentiation focus is the classic niche marketing strategy. Many small businesses
are able to establish themselves in a niche market segment using this strategy, achieving
higher prices than un-differentiated products through specialist expertise or other ways to
add value for customers.

TAKING 3 EXAMPLES OF COMPANY WITH PRODUCTS

A. Samsung Mobile

 Samsung mobile is also a business aims to differentiate of target in the market

segments and having classic niche marketing strategy with a premium price.

For Example:- Samsung Galaxy S 7, Samsung SGH-I917, Samsung pro 5.

B. Maruti Suzuki Car

 Maruti has a niche of premium products available at a premium price.

For Example:- Maruti kizashi, Maruti Vitara provides the possibility to charge
a premium price for superior quality.

C. LG Air Conditional

 A focused fifferentiation strategy requires offering unique features that fulfill the
demands of a narrow market. As with a focused low-cost strategy, narrow markets
are defined in different ways in different settings. LG has also a premium price.

For Example:- LG Split JS-Q12CPXD, LG Window AC Plus, LG Split JS-

Q12RUXA.

WE HAVE LEARNT......

 Cost Leadership
-Being the lowest cost producer in the industry as a whole.

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  Differentiation
- The exploitation of a product or service which is believed to be unique.

 Focus
- Restricting activities to only part of the market through.
- Providing goods or services at lower cost to that segment.
- Providing a differentiation product or services to that segment.

B). BCG(Boston Consulting Group)

 The BCG ( Boston Consulting Group) model is well known portfolio

management tool used in product life cycle theory. BCG matrix is
often used o prioritize which product within the company's product
mix gets more funding and attention.

BCG MATRIX of MARUTI CAR

HIGH LOW

STARS QUESTION MARK

 Maruti ZEN;  Maruti SX4;
 Maruti SWIFT.  Maruti VITARA.
HIGH

MARKET
GROWTH CASH COW DOGS
 Maruti WAGON  Maruti OMNI;
R;  Maruti VERSA.
LOW  Maruti ALTO.

MARKET SHARE

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a). STARS
- The Stars is the scenario where there is the optimum situation of high
growth and high share, this method requires an increased investment due to the
continuous growth.
Example- Maruti Suzuki Zen and Swift are in this scenario.

b). QUESTION MARK

- The Question Mark which is high market growth but low shares. In this
situation there is a high demand but low returns. It is best to try and increase
market share or get it to deliver.
Example:- Maruti SX4, VITARA are in this scenario.

c). CASH COW

- The Cash Cow cycle deals with low growth and high share. This scenario
requires a low investment and growth is also slow.
Example:- Maruti Wagon R and Alto are under this scenario.

d). DOGS
- The Dogs method is the situation where the growth is low and the market
share is low , this is one of the worst situations. In this situation if the products are
not delivering the cash then it is best to liquidate.
Example:- Maruti Omni and Versa belong to this segment.

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 CONCLUSION

The Maruti Suzuki has huge market and has left no stone unturned to
satisfy the customers. It has models in every segment of the automobile market.
Maruti Suzuki stands for value as much as it stands for performance. In spite of
rising input costs, the company tries their best to keep prices down. Their running
costs and resale values are unbeatable too. Competitive strategy of this company
facilitated healthy profit and customer satisfaction and its recognition as a company
which stands for environmental concerns.

THE END

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